EFFECT OF

WORKING CAPITAL

ON BUSINESS

PROFITABILITY
(A CASE STUDY OF HOZOPAC NIG. LIMITED. LAGOS)
BEING A PROJECT WORK SUBMITED TO THE DEPARTMENT OF

BUSINESS ADMINISTRATION, SCHOOL OF BUSINESS STUDIES, IN

PARTIAL FULFILMENT FOR THE AWARD OF HIGHER NATIONAL

DIPLOMA (HND) IN BUSINESS ADMINISTRATION.

NOVEMBER 2009

2
 CERTIFICATION

We hereby certify that this research project was carried

out ....................................... for the award of HIGHER NATIONAL

DIPLOMA CERTIFICATE. Department of Business Administration,

______________________ ____________________

DATE

Project supervisor

_____________________ ________________

DATE

Centre co-ordinator

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 DEDICATION

This research project is dedicated to the Almighty God for His ever

enduring love, kindness, mercy and grace all through the course of this

programme. Father, I thank and worship you and give You all the Glory

and Honour.

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 ACKNOWLEDGEMENT

I hereby which to Acknowledged the following people that has made my dream

and purpose in life to come through. First of all, thanks to Almighty God who

gave me power and wisdom, and the grace to be educated and to my dear One

and Only love that gives me Joy, MR

___________________________________________ and my dear mother Mrs.

___________________________________________ who is an encouragement

to my life and my brothers and Sisters ________________

________________________________________________________________

___ for their love towards me in prayer, also my supervisor who has been a

great help to me. _______________________________________ and my

lovely Register of warri center MRS Stella Oyabugbe and

……………………………………………….. my father

______________________________________________________ whose

Vision for my life was to be great and useful in life and those many love ones

too numerous to name. My prayer to God Almighty is that HE should bless you

richly in JESUS NAME.

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 ABSTRACT

This research work analyzes the effect of working capital management on firm profitability.

In accordance with this aim, to consider statistically significant relationships between firm

profitability and the components of cash conversion cycle at length, a sample consisting of

the company working capital analysis has been included. Empirical findings showed that

accounts receivables period, inventory period and leverage affect firm profitability

negatively; while growth (in sales) affects firm profitability positively.

Decisions relating to working capital and short term financing are referred to as

working capital management. These involve managing the relationship between a

firm's short-term assets and its short-term liabilities. The goal of working capital

management is to ensure that the firm is able to continue its operations and that it has

sufficient cash flow to satisfy both maturing short-term debt and upcoming

operational expenses.

In this research work, the researcher will consider in chapter one….the

introduction of the study which will in turn considers the following topics. The

background of the study, the statement of research problem, the objective of the

study, significance of the study, the hypothesis and the structure of the work.

Chapter two focuses on the literature review, this chapter is where the

researcher extract materials from various books, magazines, news papers and

internet resources. In chapter three, the researcher deals on research methods

while chapter four is data analysis and presentation. The findings, summary, and

conclusion is in chapter five.

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 CHAPTER ONE

INTRODUCION

1.1 BACKGROUND OF THE STUDY

The concept of Working Capital includes Current Assets and Current

Liabilities. There are two concepts of Working Capital which are Gross and

Net Working Capital.

1. Gross Working Capital: Gross Working Capital refers to the firm's

investment in Current Assets. Current Assets are the assets, which can be

converted into cash within an accounting year or operating cycle. It

includes cash, short-term securities, debtors (account receivables or book

debts), bills receivables and stock (inventory).

2. Net Working Capital: Net Working Capital refers to the difference

between Current Assets and Current Liabilities are those claims of

outsiders, which are expected to mature for payment within an

accounting year. It includes creditors or accounts payables, bills payables

and outstanding expenses. Net Working Capital can be positive or

negative.

The concept of Gross Working Capital focuses attention on two aspects of

Current Assets' management. They are:

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a) Way of optimizing investment in Current Assets.

b) Way of financing current assets.

a. Optimizing investment in Current Assets: Investment in Current

Assets should be just adequate i.e., neither in excess nor deficit because

excess investment increases liquidity but reduces profitability as idle

investment earns nothing and inadequate amount of working capital can

threaten the solvency of the firm because of its inability to meet its

obligation. It is taken into consideration that the Working Capital needs of

the firm may be fluctuating with changing business activities which may

cause excess or shortage of Working Capital frequently and prompt

management can control the imbalances.

b. Way of financing Current Assets: This aspect points to the need of

arranging funds to finance Company Assets. It says whenever a need for

working Capital arises; financing arrangement should be made quickly.

The financial manager should have the knowledge of sources of the

working Capital funds as wheel as investment avenues where idle funds

can be temporarily invested.

1.2 STATEMENT OF THE PROBLEM

In looking at the effect of working capital on business profitability, some

of the questions easily come to mind are:

1. what are root causes of working capital on business?

2. what are the major effects on accounts receivable ?

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 3. what is the nature of relationship between working capital and capital

employed?

4. what steps should be taken to ensure that it effect on the profit of the

firm will not be negative?

5. how can working capital be managed?

6. what make up the working capital cycle?

7. how can debtors be controlled?

1.3 OBJECTIVE OF THE STUDY

The main objective of the study is to determine the effect of working capital on business

profitability which has to do with…...................................

• Maintenance of working capital at appropriate level, and

• Availability of ample funds as and when they are needed

To accomplishment of these two objectives, the management has to

consider the composition of current assets pool. The working capital

position sets the various policies in the business with respect to

general operations like purchasing, financing, expansion and dividend

etc,

The subsidiary Objective of Working Capital Management is to provide adequate

support for the smooth functioning of the normal business operations of a company.

This Objective can be sub-divided into 2 parts:-

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1. Liquidity

2. Profitability

1) Liquidity

The quantum of Investment in Current Assets has to be made in a manner that it not

only meets the needs of the forecasted sales but also provides a built in cushion in

the form of safety stocks to meet unforeseen contingencies arising out of factors

such as delays in arrival of Raw Material, sudden spurts in demand etc.

Consequently, the investment in current assets for a given level of forecasted sales

will be higher if the management follows a conservative attitude than when it follows

an aggressive attitude. Thus, a company following a conservative approach is

subject to a lower degree of risk than the one following an aggressive approach.

Further, in the former situation the high amount of Investment in Current Assets

imparts greater liquidity to the company than under the latter situation wherein the

quantum of investment in Current Asset is less. This aspect exclusively covers the

liquidity dimension of Working Capital.

2) Profitability

Once we recognize the fact that the total amount of financial resources at the

disposal of a company is limited and these can be put to alternative uses, the larger

the amount of investment in current assets, the smaller will be the amount available

for investment in other profitable avenues at hand with the company. A conservative

approach in respect of Investment in Current Assets leaves fewer amounts for other

Investments than an aggressive approach does. Further, since the Current Assets

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will be more for a given level of Sales forecast under the conservative approach, the

turnover of Current Assets (calculated as ratio of Net Sales to Current Assets) will be

less than what they would be under the aggressive approach. Even if we assume the

same level of Sales Revenue, operating Profit before Interest and Tax and Net

(Operating) fixed assets, the company following a conservative policy will have a low

percentage of operating profitability as compared to its counter part following an

aggressive approach.

1.4 SIGNIFICANCE OF THE STUDY

This study is significant because it will produce data on the working capital

management on firm’s profitability useful to:

1. managers and top executives in organized private sector

2. students carry a research work in this same issue.

3. Bankers that deals with such firms

4. Auditors

5. Accountants

6. Financial analyst

7. Stock exchange dealers

8. The staff of the organization

9. Prospective customers of the firm

10. Creditors of such organization

11. Legal practitioners

12. The stakeholders and management staff

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1.5 LIMITATIONS OF THE STUDY

There was the limitation of the reluctance of the respondents to give

answers to survey probes.

The Questionnaire method of primary data collection was limited to the

verbal responses of subjects to pre-arrange questions. It also had

limitation that its usefulness depended on the level of education of the

subjects. There was the limitation of the problem of memory in

remembering past facts. The structured nature of the questionnaire may

compel the respondents to give answers that they do not fully endorse,

There was the limitation of the rigidity of the research instrument, which

diminishes the amount of information that could be gathered.

There was the limitation that the cost of administering the questionnaire

was very high due to high administrative, personnel and traveling costs

especially when some of the respondents were initially not on their seats.

There was the limitation that the researcher and the field data collectors

were not policemen and so they could not force some of the respondents

if they refuse to give answers. There was also the limitation of the

scarcity of time and money resources. Let categories the limitation as

follows:..

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Material Procurement

There was a lot constraints as to getting information and

materials for the job. The researcher made series of

consultations and visit to most renowned institutions to

acquire the needed information. Most materials used were

very difficult to come by, as there is no library within the

town.

Time Constraints

Combining academic work with job is no doubt a thought

provoking issue, as it has to do with time. Actually, a lot

of time was wasted as the researcher visited the

organizations and individuals together with government

agencies to obtain valuable information for the project.

Financial Constraints

The researcher would have obtained more information

than what is obtainable here but due to lack of money to

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 visit some of the firms and government agencies located a

bit farther from the researcher place of resident.

1.6 STRUCTURE OF WORK

This research work is to be organized in five chapters as follows:

1. Introduction

2. Review of Related Literature

3. Research Methods and Procedures

4. Data presentation and Analysis and

5. Summary, Findings and Conclusion

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 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 THE SPECTRUM OF WORKING CAPITAL

Cash is most important factor in financial management. Every activity in

an enterprise revolves round the cash.

As because cash is limited in every enterprise and it cannot be raised as

and when one likes it, it is, therefore, desirable that available cash must

be managed properly.

Every undertaking is desirous of utilizing the available cash most

effectively so as to accomplish the goals of the undertaking, i.e.,

maximization of profits with the minimum of efforts. But management of

cash is not as simple as it might appear. In case, the undertaking does

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not keep sufficient cash in hand, it shall not be in a position to meet the

unexpected challenges, which challenges and cash remains unutilized in

the business, it will result in losses. If heavy amounts are blocked for

unforeseen contingencies the company will not be in a position to carry on

its day to day working efficiently. It is where the real problem of cash

management comes, i.e., how much cash should be set aside for

unexpected challenges and how much for the regular day-to-day working.

It is really not an easy problem to solve. In fact, no hard and fast rules

can be suggested for the problem. All the financial management can do in

this regard, is to study the past records an take the necessary decision

bearing in mind the present economic circumstances and the behaviour

and practice of the sister concern.

In Hozopac Nigeria Limited, there are two types of assets in each concern

i.e., fixed assets and current assets. Both types of assets are to be

managed efficiently so as to earn maximum profit with minimum possible

investments because maximization of profits is the prime object of every

business.

Decisions regarding investment in fixed assets are taken through the

capital budgeting process but decision making regarding management of

working capital is a continuous process which involves control of everyday

and flow of financial resources circulating in the enterprise in one form or

the other. The accomplishment of the prime object-maximization of

profits in most businesses depends largely how their working capital is

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managed. Working capital management is considered to involve the

management of current assets, i.e., cash, accounts receivables and

inventory. Unlike the management of fixed assets which may be arranged

in special cases on long-lease basis, the working capital has no alternative

except to arrange them and us them efficiently. There are certain special

problems peculiar to the management of working capital requiring

operational and financial skills of a high order.

(1) There is a positive correlation between the sale of the product of the

firm and the current assets. An increase in the sale of the project requires

a corresponding increase in current assets. It is, therefore, indispensable

to manage the current assets properly and efficiently.

(2) More than half of the total capital of the firm is generally invested in

current assets. It means less than half of the capital is blocked in fixed

assets. We pay due attention to the management of fixed assets in details

through the capital budgeting process. Management of working capital

too, therefore, attracts the attention of the management.

(3) In emergency (Non availability of funds etc.) fixed assets can be

acquired on lease but there is no alternative for current assets.

Investment in current assets, i.e., inventory or receivable, can in no way

be avoided without sustaining loss.

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(4) Working capital needs are more often financed through outside

sources, so it is necessary to utilise them in the best way possible.

In nutshell, Working capital management involves the relationship

between a firm's short-term assets and its short-term liabilities. The goal

of working capital management is to ensure that a firm is able to continue

its operations and that it has sufficient ability to satisfy both maturing

short-term debt and upcoming operational expenses. The management of

working capital involves managing inventories, accounts receivable and

payable, and cash.

2.1 WORKING CAPITAL DEFINED

Working capital means the funds (i.e.; capital) available and used for day to day

operations (i.e.; working) of an enterprise. It consists broadly of that portion of assets

of a business which are used in or related to its current operations. It refers to funds

which are used during an accounting period to generate a current income of a type

which is consistent with major purpose of a firm existence.

2.2 Management of working capital

Management adopt a combination of policies and techniques for the management of

working capital. These policies aim at managing the current assets (generally cash

and cash equivalents, inventories and debtors) and the short term financing, such

that cash flows and returns are acceptable.

•Cash management. Identify the cash balance which allows for the business to

meet day to day expenses, but reduces cash holding costs.

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 •Inventory management. Identify the level of inventory which allows for

uninterrupted production but reduces the investment in raw materials - and

minimizes reordering costs - and hence increases cash flow; see Supply chain

management; Just In Time (JIT); Economic order quantity (EOQ); Economic

production quantity

•Debtors management. Identify the appropriate credit policy, i.e. credit terms

which will attract customers, such that any impact on cash flows and the cash

conversion cycle will be offset by increased revenue and hence Return on

Capital.

•Short term financing. Identify the appropriate source of financing, given the

cash conversion cycle: the inventory is ideally financed by credit granted by the

supplier; however, it may be necessary to utilize a bank loan (or overdraft), or to

"convert debtors to cash" through "factoring".

Working capital is directly affecting by other management issues, such as product

mix, supply chain design and business model (for example agent vs. distributor)

2.3 Decision criteria

By definition, working capital management entails short term decisions - generally,

relating to the next one year period - which are "reversible". These decisions are

therefore not taken on the same basis as Capital Investment Decisions (NPV or

related, as above) rather they will be based on cash flows and / or profitability.

• One measure of cash flow is provided by the cash conversion cycle - the net

number of days from the outlay of cash for raw material to receiving payment from

the customer. As a management tool, this metric makes explicit the inter-

relatedness of decisions relating to inventories, accounts receivable and payable,

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 and cash. Because this number effectively corresponds to the time that the firm's

cash is tied up in operations and unavailable for other activities, management

generally aims at a low net count.

• In this context, the most useful measure of profitability is Return on capital (ROC).

The result is shown as a percentage, determined by dividing relevant income for

the 12 months by capital employed; Return on equity (ROE) shows this result for the

firm's shareholders. Firm value is enhanced when, and if, the return on capital,

which results from working capital management, exceeds the cost of capital, which

results from capital investment decisions as above. ROC measures are therefore

useful as a management tool, in that they link short-term policy with long-term

decision making.

2.4 MANAGING WORKING CAPITAL

1. Working Capital Cycle

Cash flows in a cycle into, around and out of a business. It is the business's life
blood and every manager's primary task is to help keep it flowing and to use the
cashflow to generate profits. If a business is operating profitably, then it should, in
theory, generate cash surpluses. If it doesn't generate surpluses, the business will
eventually run out of cash and expire. Click here for more information about the vital
distinction between profits and cashflow.

The faster a business expands, the more cash it will need for working capital and
investment. The cheapest and best sources of cash exist as working capital right
within business. Good management of working capital will generate cash will help
improve profits and reduce risks. Bear in mind that the cost of providing credit to
customers and holding stocks can represent a substantial proportion of a firm's total
profits.

There are two elements in the business cycle that absorb cash - Inventory (stocks
and work-in-progress) and Receivables (debtors owing you money). The main
sources of cash are Payables (your creditors) and Equity and Loans.

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Each component of working capital (namely inventory, receivables and payables)

has two dimensions ........TIME ......... and MONEY. When it comes to managing

working capital - TIME IS MONEY. If you can get money to move faster around the

cycle (e.g. collect monies due from debtors more quickly) or reduce the amount of

money tied up (e.g. reduce inventory levels relative to sales), the business will

generate more cash or it will need to borrow less money to fund working capital. As a

consequence, you could reduce the cost of bank interest or you'll have additional

free money available to support additional sales growth or investment. Similarly, if

you can negotiate improved terms with suppliers e.g. get longer credit or an

increased credit limit, you effectively create free finance to help fund future sales.

2. Sources of Additional Working Capital

Sources of additional working capital include the following:

• Existing cash reserves

• Profits (when you secure it as cash !)
• Payables (credit from suppliers)
• New equity or loans from shareholders
• Bank overdrafts or lines of credit
• Long-term loans

If you have insufficient working capital and try to increase sales, you can easily over-
stretch the financial resources of the business. This is called overtrading. Early
warning signs include:

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 • Pressure on existing cash
• Exceptional cash generating activities e.g. offering high discounts for early
cash payment
• Bank overdraft exceeds authorized limit
• Seeking greater overdrafts or lines of credit
• Part-paying suppliers or other creditors
• Paying bills in cash to secure additional supplies
• Management pre-occupation with surviving rather than managing
• Frequent short-term emergency requests to the bank (to help pay wages,
pending receipt of a cheque).

3. Handling Receivables (Debtors)

Cashflow can be significantly enhanced if the amounts owing to a business are

collected faster. Every business needs to know.... who owes them money.... how
much is owed.... how long it is owing.... for what it is owed.

Late payments erode profits and can lead to bad debts.

Slow payment has a crippling effect on business, in particular on small businesses

who can least afford it. If you don't manage debtors, they will begin to manage
your business as you will gradually lose control due to reduced cashflow and, of
course, you could experience an increased incidence of bad debt. The following
measures will help manage your debtors:

1. Have the right mental attitude to the control of credit and make sure that it
gets the priority it deserves.
2. Establish clear credit practices as a matter of company policy.
3. Make sure that these practices are clearly understood by staff, suppliers and
customers.
4. Be professional when accepting new accounts, and especially larger ones.
5. Check out each customer thoroughly before you offer credit. Use credit
agencies, bank references, industry sources etc.
6. Establish credit limits for each customer... and stick to them.
7. Continuously review these limits when you suspect tough times are coming or
if operating in a volatile sector.
8. Keep very close to your larger customers.
9. Invoice promptly and clearly.
10. Consider charging penalties on overdue accounts.
11. Consider accepting credit /debit cards as a payment option.
12. Monitor your debtor balances and ageing schedules, and don't let any debts
get too large or too old.

Recognize that the longer someone owes you, the greater the chance you will never
get paid. If the average age of your debtors is getting longer, or is already very long,
you may need to look for the following possible defects:

• weak credit judgement

• poor collection procedures

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 • lax enforcement of credit terms
• slow issue of invoices or statements
• errors in invoices or statements
• customer dissatisfaction.

Debtors due over 90 days (unless within agreed credit terms) should generally
demand immediate attention. Look for the warning signs of a future bad debt. For
example.........

• longer credit terms taken with approval, particularly for smaller orders
• use of post-dated checks by debtors who normally settle within agreed terms
• evidence of customers switching to additional suppliers for the same goods.
• new customers who are reluctant to give credit references
• receiving part payments from debtors.

Profits only come from paid sales.

The act of collecting money is one which most people dislike for many reasons and
therefore put on the long finger because they convince themselves there is
something more urgent or important that demand their attention now. There is
nothing more important than getting paid for your product or service. A
customer who does not pay is not a customer. Here are a few ideas that may
help you in collecting money from debtors:

• Develop appropriate procedures for handling late payments.

• Track and pursue late payers.
• Get external help if your own efforts fail.
• Don't feel guilty asking for money.... its yours and you are entitled to it.
• Make that call now. And keep asking until you get some satisfaction.
• In difficult circumstances, take what you can now and agree terms for the
remainder. It lessens the problem.
• When asking for your money, be hard on the issue - but soft on the person.
Don't give the debtor any excuses for not paying.
• Make it your objective is to get the money - not to score points or get even.

4. Managing Payables (Creditors)

Creditors are a vital part of effective cash management and should be managed
carefully to enhance the cash position.

Purchasing initiates cash outflows and an over-zealous purchasing function can

create liquidity problems. Consider the following:

Who authorizes purchasing in your company - is it tightly managed or spread among

a number of (junior) people?

Are purchase quantities geared to demand forecasts?

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Do you use order quantities which take account of stock-holding and purchasing
costs?

Do you know the cost to the company of carrying stock ?

Do you have alternative sources of supply ? If not, get quotes from major suppliers
and shop around for the best discounts, credit terms, and reduce dependence on a
single supplier.

How many of your suppliers have a returns policy ?

Are you in a position to pass on cost increases quickly through price increases to
your customers ?

If a supplier of goods or services lets you down can you charge back the cost of the
delay ?

Can you arrange (with confidence !) to have delivery of supplies staggered or on a

just-in-time basis ?

5. Inventory Management

Managing inventory is a juggling act. Excessive stocks can place a heavy burden on
the cash resources of a business. Insufficient stocks can result in lost sales, delays
for customers etc.

The key is to know how quickly your overall stock is moving or, put another way, how
long each item of stock sit on shelves before being sold. Obviously, average stock-
holding periods will be influenced by the nature of the business. For example, a fresh
vegetable shop might turn over its entire stock every few days while a motor factor
would be much slower as it may carry a wide range of rarely-used spare parts in
case somebody needs them.

Nowadays, many large manufacturers operate on a just-in-time (JIT) basis whereby

all the components to be assembled on a particular today, arrive at the factory early
that morning, no earlier - no later. This helps to minimize manufacturing costs as JIT
stocks take up little space, minimize stock-holding and virtually eliminate the risks of
obsolete or damaged stock. Because JIT manufacturers hold stock for a very short
time, they are able to conserve substantial cash. JIT is a good model to strive for as
it embraces all the principles of prudent stock management.

The key issue for a business is to identify the fast and slow stock movers with the
objectives of establishing optimum stock levels for each category and, thereby,
minimize the cash tied up in stocks. Factors to be considered when determining
optimum stock levels include:

• What are the projected sales of each product?

• How widely available are raw materials, components etc.?
• How long does it take for delivery by suppliers?

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 • Can you remove slow movers from your product range without compromising
best sellers?

Remember that stock sitting on shelves for long periods of time ties up money which
is not working for you. For better stock control, try the following:

• Review the effectiveness of existing purchasing and inventory systems.

• Know the stock turn for all major items of inventory.
• Apply tight controls to the significant few items and simplify controls for the
trivial many.
• Sell off outdated or slow moving merchandise - it gets more difficult to sell the
longer you keep it.
• Consider having part of your product outsourced to another manufacturer
rather than make it yourself.
• Review your security procedures to ensure that no stock "is going out the
back door "

6. Key Working Capital Ratios

The following, easily calculated, ratios are important measures of working capital
utilization.

Ratio Formulae Result Interpretation

On average, you turn over the value of your entire stock every x days.
You may need to break this down into product groups for effective stock
Stock Turnover Average Stock * 365/ management.
= x days
(in days) Cost of Goods Sold Obsolete stock, slow moving lines will extend overall stock turnover
days. Faster production, fewer product lines, just in time ordering will
reduce average days.
It take you on average x days to collect monies due to you. If your
Receivables Ratio Debtors * 365/ official credit terms are 45 day and it takes you 65 days... why ?
= x days
(in days) Sales One or more large or slow debts can drag out the average days.
Effective debtor management will minimize the days.
On average, you pay your suppliers every x days. If you negotiate better
Creditors * 365/ credit terms this will increase. If you pay earlier, say, to get a discount
Payables Ratio
Cost of Sales (or = x days this will decline. If you simply defer paying your suppliers (without
(in days)
Purchases) agreement) this will also increase - but your reputation, the quality of
service and any flexibility provided by your suppliers may suffer.
Current Assets are assets that you can readily turn in to cash or will do
so within 12 months in the course of business. Current Liabilities are
amount you are due to pay within the coming 12 months. For example,
Total Current Assets/
Current Ratio = x times 1.5 times means that you should be able to lay your hands on $1.50 for
Total Current Liabilities
every $1.00 you owe. Less than 1 times e.g. 0.75 means that you could
have liquidity problems and be under pressure to generate sufficient
cash to meet oncoming demands.
(Total Current Assets -
Similar to the Current Ratio but takes account of the fact that it may take
Quick Ratio Inventory)/ = x times
time to convert inventory into cash.
Total Current Liabilities
(Inventory + Receivables -
Working Capital Payables)/ A high percentage means that working capital needs are high relative to
As % Sales
Ratio Sales your sales.

Other working capital measures include the following:

-Bad debts expressed as a percentage of sales.

-Cost of bank loans, lines of credit, invoice discounting etc.

-Debtor concentration - degree of dependency on a limited number of customers.

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Once ratios have been established for your business, it is important to track them
over time and to compare them with ratios for other comparable businesses or
industry sectors.

CHAPTER THREE

RESEARCH METHODS AND PROCEDURES

3.1 RESEARCH DESIGN

The research method selected for the study is a combination of a survey

and an industrial study. The survey research method is described

hereunder that:

(i) It is a design in which primary data is gathered from members of

the sample that represents a specific population;

(ii) It is a design in which a structure and systematic research

instrument like a questionnaire or an interview schedule is utilized

together with the primary data;

26
(iii) It is a method in which the researcher manipulates no explanatory

variables because they have already occurred and so they cannot be

manipulated;

(iv) Data are got directly from the subjects;

(v) The subjects give the data the natural settings of their workplaces;

(vi) The answers of the respondents are assumed to be largely

unaffected of the Context in which they are brought;

(vii) The impacts of the confounding factors are “controlled”

statistically; and

(viii) The aim of the research may span from the exploration phenomena

to hypotheses testing (stone 1995).

The survey research method has some merit, which are to be articulated

hereunder: In the survey research method, the sample of the respondents

is selected in such a way as to make for the generally low due to the

utilization of big sample sizes, which results in generally low sample

errors. Also the probability sampling techniques utilized in selecting the

samples of the respondents in a survey especially, the selecting the

samples of the respondents in a survey especially, the random sampling

techniques makes it possible to give every element in the population a

known and chance of belonging to the sample and by so doing, sample

bias is either minimised or completely eliminated (Stone 1995). Sampling

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even as a compromise has a lot of strength. The survey research method

also has the merit that data collection takes place in the “natural” settings

of the workplace rather than an activated laboratory. Data is collected

directly from the respondents. The advantage that the survey yields data

that suggests new hypothesis is very illuminating. There is also the merit

that a set of systematic data collection instruments such as questionnaire

interview schedules and observation gadgets can either be used alone or

in conjunction with other instruments (Stone, 1995).

The survey research method also has some demerits. There is the demerit

that there is a decreased willingness of the subjects to give responses to

survey probes. There is the demerit that most surveys are “one shot” or at

most “two short” as opposed to the panel type of research design, in

which repeated measures are taken on the same sample using

questionnaires. The result of this shortcoming is that the ability of the

survey research method to yield data with which to test the causal

relationships of variables is minimized (stone, 1995).

There is also the demerit of the survey that in terms of total expenditure,

the survey research methods is a highly costly research method due to a

large administrative, and/or personnel and travel expenses especially

when the research and the field data collectors have to do several trips to

get at some subjects that were not originally available. There is also the

28
 demerit that the structured and pre-arranged response formats of many

survey measures e.g. questionnaires and structure interview schedules

many compel the subjects to give response which they do not really

accept (stone, 1995 ).

Apart from the choice of the survey research design, the industry is also

chosen for the study. The study on the internal control in the aviation

industry is for only industry and there was the need to deliver

questionnaires to the managers in at least two firing investigation in some

depth.

3.2 SAMPLING

Spiegel (1992) observes that sampling theory is a study of the

relationship existing between a population or universe and the samples

drawn from it. The population in this study is the entire staff of the firm.

In order to make conclusions of sample theory and statistical references

to be valid, a sample must be selected as to be representative of the

population (Spiegel, 1992 ). One way in which a representative sample

may be got, is by the process of stratified random sampling. In this

research work, the technique of simple random sampling is used to select

the sample of 100 respondents from a total sample size of 200.

29
 The list of all the senior staff in the two firms in the aviation industry is

got from the personnel department of the firms in the industry. The

numbers are written on a piece of paper, put in a basket and the papers are

folded to cover the numbers and one of the pieces of paper is selected at a

time without replacing it and any name corresponding to the number

becomes a number of the sample. This method of sampling without

replacement is done until the sample of 100 respondents per firm is got.

3.3 DATA COLLECTION

As earlier stated, the primary data collection instrument in this study was

the questionnaire. In the questionnaire method of primary data collection,

a heavy dependence was placed on verbal reports from the subjects to get

information on the role of packaging as a management strategy.

The questionnaire had a lot of merits. It needed less skill to administer.

Further, Questionnaire can be administered to a big number of individuals

at the same time. Also with a specific research budget, it was usually

possible to cover a brooder area and to get information from more

subjects by a questionnaire. The impersonal nature of a questionnaire, its

structure and standardized wording, its order of question, its standardized

instructions for recording answers might make one to conclude that if

30
offers some uniformity from one measurement occasion to another

(Selltiz et al, 1976).

Another merit of questionnaire was that subjects may have a bigger

confidence in their anonymity, and thus feel freer to express views they

feel might be disapproved-Another attribute of the questionnaire that is

sometimes, through not always desirable is that it might place less

pressure on the subjects for immediate response (Selltiz et al, 1976).The

questionnaire also has some demerits. It has been estimated that for

purpose of giving dependable responses to a questionnaire, one

respondents must be considerable educated, Thus one of the demerits of

the usual questionnaire is that it is appropriate only for with a

considerable amount of education. There is also the demerit that subject

may be reluctant and unable to report on the particular subject matter.

Also, if a subject misinterprets a question or give his or her answer in a

batting manner, there is often a little that can be done to ameliorate the

situation. In a questionnaire, the information the researcher gets is limited

to the fixed alternative answer format, when a specific answer is not

available, it can lead to errors (Selltiz, 1976).

There is also limitation of memory in reporting on past facts. There is

also a problem beyond memory. Usually, the cause of a failure to report

31
past facts is not forgetting in the usual sense of the word but rather, it

may be motivational. Also the researcher is not a policeman that can

compel answers. That is, the information may not be readily accessible to

the subject and thus the subject may be reluctant to put forth enough

alternative information that he or she is only barely conscious of (Selltiz

et al, 1996).

In this research project a structured and undisguised questionnaire is

utilised which is made up of two parts namely, the personal data section

and the section on the data on the actual subject matter of the work. The

questionnaire is undisguised in the sense that the purpose of the data

collection which is to collect primary data for writing up the researcher’s

HND project is made known to the 200 respondents. The questionnaire is

structured in the sense that the questions are logically sequenced and are

to be asked to the respondents in the same manner and no follow up

questions are to be allow. Some of the questions are of the fixed

alternative answer format type. Ten (10) of the questions have yes or no

answers, Ten (10) of the questions have alternative answers for the

respondents to tick.

The structured questionnaire has the merit that it yields data that is easier

to analyse than data produced by an unstructured questionnaire. Also the

structured nature diminishes both researchers and research instrument

32
 biases. It however has the demerit that the rigidity of the research

instrument diminishes the amount of information that could be got.

The method of communication of the research instrument is by means of

the personal interview. The method has the merit that it produces a better

sample of the population than either mail or the telephone methods. It

also has the merit that it gives a very high completion and response rates.

It has the merit that the interview has a bigger sensitivity

misunderstandings by the respondents and gives a chance for clarification

of misunderstood questions.

It has the merit that it is a very feasible method (Selltiz et al, 1976). The

personal interview method has the demerit that it is more costly than the

mail or the telephone methods of communication of a questionnaire.

3.4 FIELD WORK

The researcher and three other field data collectors did the fieldwork.

The field data collectors were other classmates also offering the part-time

HND program, who have also offered Research Methodology and are

staff of the firm’s studies and so they had no problem gaining entrance in

the firms. They were to be trained by the researchers on how to gain

entry , greet the respondents and , how to tick the questionnaire correctly,

and honestly.

33
3.5 DESCRIPTION OF DATA PRESENTATION AND ANALYSIS

TOOLS

The data presentation tools were simple bar charts, histograms, and

pictorial tables. The most important parts of a table include;

(a) Table numbers

(b) Title of the table

(c) Caption

Stub or the designation of the rows and columns

The body of the table.

(f) The head note or prefatory note or explanatory just before

the title;

Foot note, which is an explanation not at the end of the page

(h) source note, which refers to the literally or scientific source

of the table(Mills and Walter 1995)

Anyiwe (1994) has observed that a table has the following merits

over a prose information that;

A table ensure an easy location of the required figures;

(j) Comparisons are easily made utilizing a table than a prose

information;

34
 (k) Patterns or trends within the figures which cannot be

visualised in the prose information can be revealed and

better depicted by a table; and

A table is more concise and takes up a less space than a

prose formation:

The data is to be analysed by means of percentage, cross tabulation

and the z test of population proportions for testing the three

hypotheses. Percentages express the ration of two sets of data to a

common base of 100. Percentages facilitate comparison and

address the problem of the misleading tendency of absolute in

which 8 over 10 is greater than 12 over 15 as the first ratio gives a

percentages of 80 while the later gives a percentages of 75 . Cross

tabulation involves utilising a table to display two or more

variables. The z test of population of the respondents who said yes

to a particular yes or no question is given at 5% level of

significance to a particular (Spiegel, 1992)

It is in this respect that this study finds it worthwhile to address the following
questions using time series data for a 31-year period, 1970-2000: (a) what is the

35
nature of relationship between poverty, unemployment and growth in Nigeria?
(b) what steps should be taken to ensure that growth is such that brings about
decrease in unemployment and poverty in Nigeria?

REFERECES

Anyiiwe, E. M. A. EXOSTAT! Statistical Handbook of Economist,

Social Scientists, (Yaba, Lagos: Ama Resources

Nigeria Limited, 1994)

Mills, G. Ho, and Wallter, J. A. Technical Writing, (New York: Holt,

Rinehart and Winston, 1995)

Selltiiiz, C. Wrightsman, L. S., and cook, S. W. Research Methods in Social

Relations,(New York: Holt, Rinehart and

Winstons, 1976).

Spiegel, M. R. Schaun’s outline of theory and problems of

statistics in S. I. Units, (New York: Mcgraw-hill

book company 1992)

36
Stone, E. Research method in organisational behaviour (Santa, Monica,

California:Good Year publishing company

incorporated, 1995).

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

In the previous chapter, the research methods and procedures have been

handled. In this chapter the data presentation and analysis are to be done.

The data is to be presented by means of tables, two simple bar charts, one

histogram and one pie chart to make it amenable for further analysis. By

analysis, it meant the act of noting relationship and aggregating the set of

variables with similar attributes and also breaking the unit of their

components (Mills and Walters 1995).

37
 In this research work, the researcher accepts the contention of Podsakoff

and Dalton (1995) that the factual information from the data can be used

as a basis for reasoning, calculation and discussion.

Apart from the heading above, the other headings in this chapter includes:

1. Data presentation,

2. Percentage analysis

3. Cross- tabulated analysis

4. Hypothesis testing

4.2 DATA PRESENTATION

TABLE 1

THE SUMMARY OF THE PERSONAL DATA OF THE RESPONDENTS

1 SEX FREQUENCY
Male 150
Female 50
Total 200
2 Marital status Angles
suspended
Married 130
in degree
Single 70
Total 200
3 AGE
21-30 years 90
31-40 years 90
41-50 years 10
51-60 years 10
Total 200
4 HIGHER
EDUCATIONAL
QUAIFICATION

38
 DIPLOMA
OND 10 18
HND 30 54
FIRST DEGREE 80 144
SECOND DEGREE 20 36
ACA 40 32
TOTAL 20 36
200 360

The marital statuses of the 200 respondents, it is found that 130 of them

are married while 70 of them are single. For the ages of the 200

respondents they are 21-30 years, 31-40 years, 15-60 years with

frequencies of 90 and 10 respectively. For the highest educational

qualification of the 200 respondents they are diploma, OND, HND, First

Degree, Second Degree, A.C.A. and they have frequencies of 10, 30, 80,

20, 40 and 20 respectively.

Figure 4.1 below shows the simple bar chart of the data on the sex of the

respondents

FIGURE 4.1: THE SIMPLE BAR CHART OF THE DATA ON THE SEX OF THE
RESPONDENTS MALE
160
150
150
FEMALE
140
130
120
110 50

100

90
80

70
39

M F Sex of the respondents

 Source: from data in table 1

From figure 4.1 above, it is shown that male respondents have the modal

frequency of 150 of the 200 respondents while the female respondents

have the frequency of 50 of them.

Figure 4.2 below shows the simple bar chart of the data on the marital

statuses of the respondents.

FIGURE 4.2: THE SIMPLE BAR CHART OF THE DATA ON THE MARITAL
STATUSES OF THE RESPONDENTS

MARITAL STATUS OF THE RESPONDENTS

140

120

100

80

60

40
Frequency

20

0
MARRIED SINGLE
MARITAL STATUS OF THE RESPONDENTS
Frequency
MARITAL STATUS Percent
OF THE RESPONDENTSValid Percent Cumulative
Percent

Valid MARRIED 130 65.0 65.0 65.0

SINGLE 70 35.0 35.0 100.0

40
Total 200 100.0 100.0
From figure 4.2 above, it is shown that the married respondents have the

modal frequency of 130 out of the 200 respondents while the single

respondents have the frequency of 70 of them.

FIGURE 4.3: THE HISTOGRAM OF THE DATA ON THE AGES OF

THE RESPONDENTS.

AGE OF THE RESPONDENTS

100

80

60

40
Frequency

20
Std. Dev = .78
Mean = 1.7

0 N = 200.00
1.0 AGE
2.0OF THE RESPONDENTS
3.0 4.0
Frequency Percent Valid Percent Cumulative
Percent
AGE OF T HE RESPONDENT
Valid 21 - 30 YEARS 90
S 45.0 45.0 45.0

31 -40 YEARS 90 45.0 45.0 90.0

41 - 50 YEARS 10 5.0 5.0 95.0

51 - 60 YEARS 10 5.0 5.0 100.0

41
Total 200 100.0 100.0
 SOURCE: From the data in Table 1.

From figure 4.3 above, it is shown that the age classes are 20.5-30.5

years, 30.5-40.5 years, 40.5-50.5 years and 50.5-60.5 years with

frequencies of 90, 10, and 10 out of 200 respectively. This shows that

this is a bi-modal distribution as the age classes of 20.5-30.5 years and

30.5-40.5 years have a frequency of 10.

Figure 4.4 below shows the pie chart of the data on the highest

educational qualifications of the 200 respondents.

EDUCATIONAL QUALIFICATION OF THE RESPONDENTS
Frequency Percent Valid Percent Cumulative
FIG.4.4 THE PIE CHART OF THE DATA ON THE HIGHEST Percent
Valid DIPLOMA 10 4.8 5.0 5.0
OND
EDUCATION QUALIFICATIONS30 14.3THE 200 15.1
OF RESPONDENTS20.1
HND 80 38.1 40.2 60.3
FIRST DEGREE 19 9.0 9.5 69.8

SECOND DEGREE 40 19.0 20.1 89.9

ACA 20 9.5 10.1 100.0

Total 199 94.8 100.0 42
Missing System 11 5.2
Total 210 100.0
EDUCATIONAL QUALIFICATION OF THE RESPONDENTS

Missing DIPLOMA
ACA
OND

SECOND DEGREE

FIRST DEGREE HND

SOURCE: From the data in table 1.

From figure 4.4 above, the Highest Educational Qualifications are

Diploma, O.N.D, First Degree, Second Degree and A.C.A and the

43
 subtend angles equal to 180, 540, 1440, 360, 720 and 360 and respectively

at the center of the circle.

PERCENTAGE ANALYSIS
Table 2 below shows the percentage analysis of the responses to the yes
or no Questions.
S/N QUESTIONS YES % NO % TOTAL TOTAL
IN NUM. IN %

1 Can unemployment be caused 190 95 10 5 200 100

by an individual?
2 Is there any relationship 200 100 0 0 200 100
between poverty, unemployment
and growth?
3 Does government 190 95 10 5 200 100
regulation cause
unemployment?
4 Can unemployment leads to 180 90 20 10 200 100
sickness and mental disorder?
5 Does unemployment leads to 200 100 0 0 200 100
homelessness and loss of self-
esteem?
6 Can we say that unemployment 100 80 40 20 200 100
is one of the causes of youth

44
 disturbances in the community?
7 Is unemployment a social 200 100 0 0 200 100
problem?
8 Can government do something 85 30 15 200 100
to reduce the rate of
170
unemployment in the country?

9 Does politics contribute to

the cause of
unemployment? 200 100 0 200 100
10 Is it possible eradicate 200 100 0 0 200 100
unemployment totally
from the society?

SOURCE: From the questionnaires administered

Table 2 above shows the answers to the yes or no questions in both

absolute numbers and percentages. The 200 respondents were asked if the

unemployment be caused by an individual. 190 of them making 95% said

yes and 10 of them making 5% of them said no. The 200 respondents

were asked whether there is any relationship between poverty,

unemployment and growth. 100 respondents making 50% of them said

yes. The respondents were asked if government regulation can cause

unemployment, 190 of them making 95% of them said yes while 10 of

them making 5% of them said no.

The 200 respondents are asked whether unemployment can lead to

sickness and mental disorder, 180 of them making 90% said yes and 20

of them making 10% of them said no. The 200 respondents were asked if

unemployment can lead to homelessness and loss of self-esteem 100 of

them making 50% said yes. The 200 respondents were asked whether

45
unemployment is one of the causes of youth disturbances in the

community. 160 of them making 80% of them said yes and 40 of them

making 20% of them said no.

The 200 respondents are asked if unemployment is a social problem.

100% of them said yes. The 200 respondents are asked if government can

do something to reduce the rate of unemployment in the country. 170 of

them making 85% of them said yes and 30 of them making 15% of them

said no. The 200 respondents are asked if politics contribute to the cause

of unemployment 100% of them said yes. They were asked if it is

possible to eradicate unemployment totally from the society.100 of them

said yes.

`4.4 CROSS – TABULATED ANALYSIS

Table: 3 below shows the analysis of the statuses of the 200 respondents

TABLE: 3 THE ANALYSIS OF THE STATUSES OF THE 200

RESPONDENTS.

STATUS FREQUENCY PROPORTION

SENIOR 80 0.4

STAFF
JUNIOR STAFF 120 0.6
TOTAL 200 1
SOURCES: From the questionnaires administered.

46
 From the table 3 above, it is shown that the 200 respondents has the

proportion of 0.4 for senior staff and 0.6 for the junior staff making a

proportion of 1 in all .

TABLE 4: THE ANALYSIS OF THE COST OF

UNEMPLOYMENT

COST OF UNEMPLOYMENT F P(%)

i. individual 110 0.55

ii. society 90 0.45

TOTAL 200 1

F. Stands for frequency, p for proportion.

SOURCE: from the questionnaires administered.

From table 4 above it is shown that the cost of unemployment are:

1. cost to individual

2. cost to the society

47
They have frequencies of 110and 90 respectively out of 200 making

proportions of the total of 0.55, and 0.45 respectively.

TABLE 5: THE ANALYSIS OF THE CAUSES OF UNEMPLOYMENT

CAUSES OF UNEMPLOYMENT FREQUENCY PROPORTION

i. Economic growth 40 20
ii. Technological advancement 35 17.5
iii. Politics 30 15
iv. Government regulation 55 27.5
v. Individual 40 20
Total 200 100

SOURCE: From the questionnaires administered.

From Table 5 above, it is shown that the major causes of unemployment

by the respondents are economic growth, technological advancement,

politics, government regulation and individual. They have frequencies of

40, 35, 30, 55 and 40 respectively out of 200 making proportions of the

total of 20, 17.5, 15, 27.5 and 20 respectively.

Table 6 below shows the analysis of the components of their internal

control system

TABLE. 6: THE ANALYSIS OF THE COMPONENTS OF THEIR

48
 PACKAGING SYSTEM.
COMPONENT FREQUENCY PROPORTION
I: inputs 75 0.375
Ii: processing 85 0.425
units
Iii: outputs 40 0.20
TOTAL 200 1.000

Source: From the questionnaire administered

From table 6 above it is shown that the components of their packaging

system are processing units, Inputs and output in a descending order of

magnitude. They have frequencies of 85. 75 and 40 respectively

TABLE:7 THE ANALYSIS OF THE UNEMPLOYMENT

MEASUREMENT
MEASUREMENT FREQUENCY PROPORTION
1: Official Estimates 58 29
2: Labour Force Sample 60 30
Surveys materials
3: Social Insurance Statistics 17 8.5
4. Employment Office Statistics 65 32.5
200 100

SOURCE: From the questionnaires administered.

From table 7 above, the constraints on packaging system are lack of

knowledge of materials, choice of packaging materials and cost of

packaging. They have frequencies of 82,60,and 58 out of 200 respectively

giving proportions of 0.41, 0.30, and 0.29 respectively.

49
4.5 HYPOTHESES TESTING
Three hypotheses are to be tested as follows, that the proportion of the
respondents that said yes is 90% when asked:
1. If UNEMPLOYMENT IS CAUSE BY INDIVIDUAL;
2. If UNEMPLOYMENT IS CAUSE BY GOVERNMENT REGULATION
3. If UNEMPLOYMENT IS CAUSE BY TECHNOLOGICAL
ADVANCEMENT
The alternative hypotheses in each case are that the proportion is greater

than 90% at 5% level of significance. The z test of the population

proportions is used.

TABLE 8: THE COMPUTATIONAL DETAILS OF THE THREE

HYPOTHESES
HYPOTHESES CALCULATED TABLE DECISION
NO. VALUES VALUE
1 2.357 1.045 Reject Ho
2 4.714 1.645 Reject Ho
3 4.714 1.645 Reject Ho
HO: P = 0.9
HA: P > 0.9
SOURCE: From the data in table 2 and from the statistical table
From table 8 above it is shown that for each of the three hypotheses, the

calculated value is greater than the table value and so the null hypotheses

in each case is rejected and the alternative hypothesis is accepted. So in

each case the proportion of the respondents who said yes is greater than

90%

50
 REFERENCES

Mills. G .A AND Walter, J.A.C. 1995)

Technical writing New York: holt. Rinehart and Winston.

Podsakoff, p.m and Dalton, P.R. (research methodology in

organisational studies. Journal of management. Volume 13,

number 2, 419 – 441

51
 CHAPTER FIVE

FINDINGS, SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 FINDINGS

Through this research, the researcher has been able to discover and

established the fact that:

1. The unemployed are those who want and are able to work but who

have no work at present. They might alternatively be described as having

no work, being available for work, and looking for a job or waiting for

their work to resume or begin in the near future

2. Unemployment levels are increasing dramatically in many parts of the world.

3. Unemployment has obvious and well-documented links to

economic disadvantage and has also been connected in some

discussion to higher crime rates this our country.

4.

5.2 SUMMARY

52
According to Adrian Sinfield, when there is high unemployment

(1) the employed feel less secure;

(2) workers are less willing to leave unsatisfactory jobs;

(3) divisions in society increase;

(4) the prospect of equality of opportunity decreases. Some local areas

can develop a culture of despair. Lea and Young argue that this occurred

in some inner cities of Britain and helped cause the riots of the 1980s.

Various attempts have been made to link unemployment to many social

ills such as ill-health, premature death, attempted and actual suicide,

marriage breakdown, child battering, racial conflicts and football

hooliganism. There is evidence to link unemployment to poor health. For

example,

(1) some unemployed graduates in this nation had poorer mental health

than employed ones; (2) in 1971 a study based on the British census

found a 20% higher mortality rate among the unemployed than among the

employed; (3) a 1982 study of Edinburgh found the suicide and attempted

suicide rate of unemployed men was 20 times higher than that of

employed men; (4) studies indicate that children of the unemployed are

not as tall as those of the employed. Such studies do not actually show

that unemployment causes ill health, but they establish a statistical

correlation. Chas Critcher, Bella Dicks and Dave Waddington in the early

1990s studied the effect of unemployment on two pit villages in

53
Yorkshire using a questionnaire method. In both villages pit closure

resulted in significant long-term unemployment, and there were high

stress levels throughout the community. Women suffered as much as

men; wives of miners had to bear the brunt of family poverty and cope

with male despair. There were social and economic problems for the

community as a whole, and the fabric of the villages started to decay.

Crime increased. Both villages were communities that had experienced

total disorientation. Unemployment costs the taxpayer. Between 1979 and

1985 unemployment benefits amounted to 33 billion. There is also a loss

of tax revenue, since people who are out of work do not pay taxes.

In Nigeria, the national unemployment rate, estimated by the

Office of Statistics as 4.3 percent of the labour force in 1985, increased to

5.3 percent in 1986 and 7.0 percent in 1987, before falling to 5.1 percent

in 1988 as a result of measures taken under the SAP. Most of the

unemployed were city dwellers, as indicated by urban jobless rates of 8.7

percent in 1985, 9.1 percent in 1986, 9.8 percent in 1987, and 7.3 percent

in 1988. Underemployed farm labour, often referred to as disguised

unemployed, continued to be supported by the family or village, and

therefore rural unemployment figures were less accurate than those for

urban unemployment.

54
 The International Labor Organization (ILO) is trying to do something

about unemployment in Nigeria. The ILO says that 6.4-million Nigerians

are looking for work, which would make the unemployment rate there 4.7

percent.

5.3 CONCLUSION

The unemployed can be distinguished from the much larger number who

are employed, on their own account or by an employer, or who, unlike the

employed and the unemployed, are not in the labour force. The employed

have jobs, although some may be temporarily absent from work because

of illness, strikes, bad weather, etc. Those not in the labour force do not

want to or cannot participate in the LABOUR MARKET. They include

housewives, students, retirees, etc.

Because of the unemployment problem and all the evils that it brings

about, the large youth population is often considered more a burden than

a boon for the nation by the general people, but not so by the policy

makers who continue to remain optimistic and inspire others into

believing that it is this youth who will change the future of the nation for

the better.

5.4 RECOMMENDATION

55
The trust for modernization in African countries has produced a variety of

unintended consequences which created in-coherences in the social and

psychological worlds of large number of citizens.

Cyclical unemployment is caused by the economic downturns. When the

economy improves the unemployment rate falls. In this case, is it

recommended that government should be more concern about the

improvement of nation’s economy.

-Structural unemployment is caused by changes in the structure of the

economy. I.e. a technological shift can replace jobs that used to be held

by often low skilled or unskilled workers. It recommended that people

should engage themselves constantly in training and retraining in order to

meet the ever-changing need/demand in the labour market.

-Frictional unemployment is caused by those who are temporarily

unemployed moving from one job to another. At any one time there will

be some who are frictionally unemployed. The researcher hereby

recommend that people should be satisfied with their current employment

to avoid move about.

-Seasonal unemployed are those such as grape pickers who are

unemployed for half the season because there is a lack of demand for

56
them in a particular season. When the season of the job elapses, people

should not relax but move to a different job.

-Long term unemployed are those who have been out of work for 18

months or longer. It is usually extremely hard for those people to gain

employment. It is recommended that such people should learn a particular

trade to later become self-employed.

57
 REFFERENCES

When persons e number of citizens. When persons experience extreme social

dislocations and anxieties with regard to legitimate expectations and values,
they often are in APPENDIX 1 COVERING LETTER

Department of Business
Administration Akwa Ibom State
Polytechnic
Continuing Education Centre
Km 3 Refinery Road,
Effurun-Warri
Dear sir/ madam,
QUESTIONNAIRE

You will no doubt share with me the conviction that a Higher National Diploma
student in the above department is researching on unemployment syndrome among
Nigerian graduates: effects and solution
Please take the little time required to complete the attached questionnaire.

Your responses are to be kept in the strictest confidence and share under no
circumstances to be divulged. They are to be combined with those of other subjects to
get composites and averages for writing up the researcher’s HND project.
Yours sincerely,

KATE OMEH.

58
 APPENDIX II: QUESTIONNAIRRE
Unemployment Syndrome among Nigerian graduates: Causes, effects and solution.

PERSONAL DATA

1 SEX: MALE FEMALE

2 Marital status Married Single

Divorced Widowed Separated

3 Age : Less than 20 years 21-30 years

31-40 years 41-50 years Above 60 years

4 Highest Education Qualifications

Senior School Certificate Diploma O.N.D

H.N.D. First Degree Second Degree

Professionals Qualification (state which) _______________

(5) Status: Senior Staff Junior Staff

DATA ON UNEMPLOYMENT SYNDROME

(4) Unemployment is a state in which an able-bodied individual is actively seeking, but is

unable to secure, any gainful employment.

59
 Yes No

(6) Is it possible eradicate unemployment totally from the society?

Yes No
(7) Does politics contribute to the cause of unemployment?
Yes NO

(8) Can government do something to reduce the rate of unemployment in the country?
Yes No
(9) Is unemployment a social problem?
expectation Yes No
(10) What are the steps to control unemployment in the country?

Steps

i. Establish goals and standard for al the unemployed graduates

ii. Implementing the plan

iii. Measuring performance against goals

iv. Evaluating

v. Taking action if things are okay

vi. Taking corrective action if things are not okay

vii. Modifying plans

viii. Modifying operations

60
(11) Is Official Estimates, one of the means of measuring unemployment? No

YES

(12) Can we say that unemployment is one of the causes of youth disturbances in the

community?

Yes No

(13) What are the different types of unemployment that is prevalence in the country ?

TYPES

i. Frictional
unemployment
ii Employee Incentives

(14) Can Economic Growth cause unemployment?

YES NO
(15) Does unemployment leads to homelessness and loss of self-esteem?

YES NO
(16) Can unemployment leads to sickness and mental disorder?

NO YES

(17) Does government regulation cause unemployment?

YES NO
(18) Is there any relationship between poverty, unemployment and growth?

YES NO
(19) Can unemployment be caused by an individual?

NO YES
(20) Unemployment may impair the functioning of families

NO YES

61
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